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GAO was asked to review selected areas of the Department of Energy's (DOE) financial management. Significant problems were found in the areas of internal controls, cash and property management, and contract administration.

GAO found that: (1) both the computerized and manual accounting controls need improvement at the headquarters and four field offices reviewed; (2) DOE has not adequately monitored government funds held by grantees and, contrary to Treasury regulations, large amounts of cash were provided to grantees before need; (3) DOE does not have an effective system for recording, managing, and disposing of government property held by contractors; and (4) projects for the Strategic Petroleum Reserve (SPR) project need to be better administered, particularly with regard to audit coverage.

Recommendations for Executive Action

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should form a task force at the highest level in the organization to address the wide range of internal control weaknesses and financial management problems that have been identified.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should require that contractors meet all property reporting requirements within the allotted time.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: DOE disagreed with this recommendation.

Recommendation: The Secretary of Energy should create, to the extent practicable, dedicated functional support staff for each program Assistant-Secretary-level manager.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: DOE disagreed with this recommendation.

Recommendation: The Secretary of Energy should reconsider earlier recommendations on the issue of functional and program responsibilities, with particular emphasis on giving direct line authority to the headquarters functional offices managers over all their respective field functional office staffs. In exercising this authority, headquarters functional office managers should ensure that the independence of functional offices is maintained in headquarters and in the field so that they can effectively carry out their missions; and that program Assistant-Secretary-level managers receive functional support for actions that are considered critical for meeting established goals and objectives.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should require more effective coordination with Defense Contract Administrative Service property administrators to ensure that all property reviews are communicated to DOE officials.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should strengthen the monitoring of contractors' procurement activities and compliance with procurement requirements.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should require the DOE Inspector General to periodically report on the audit coverage of SPR activities and actions taken on audit findings.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should take more timely and complete action on all appropriate audit recommendations.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should determine the status of incurred cost audits, make any necessary improvements to enhance the audit environment, and provide adequate coverage of contractors as agreed with DCAA.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should ensure that contractors are notified of property disposal procedures at the time of contract award.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should establish procedures for the timely disposal of property associated with major Energy facilities, such as pilot plants and demonstrated projects.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should establish procedures to require periodic reconciliation of procurement and accounting records at each operations office.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: The recently enacted Federal Managers' Financial Integrity Act now requires this type of certification. DOE compliance with the act will be examined as part of a separate review.

Recommendation: The Secretary of Energy should require the field office managers to submit periodic statements certifying whether prescribed internal control procedures are being followed and attesting to their effectiveness.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should initiate further action with the Office of Management and Budget to obtain approval of needed forms and procedures that would enable DOE to better carry out its cash management responsibilities.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should provide more specific instructions to existing and future grantees, informing them precisely of their cash management responsibilities, emphasizing that disbursements are to be made only to meet immediate program needs, and reaffirming that all excess cash or earned interest is to be returned to DOE.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should ensure that DOE-wide cash management policies and procedures are complied with at all DOE offices administering grants. In this regard, lines of responsibility should be clearly delineated and officials held accountable for adherence to the established procedures. Each DOE office should adopt stronger techniques to follow in monitoring grantee cash balances and in ensuring that timely and accurate financial information is maintained.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should clarify existing procedures concerning the accounting treatment of property purchased with DOE operating funds and plant and capital equipment funds to ensure uniform accounting throughout DOE.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should undertake a one-time project DOE-wide to identify all government-owned property held by offsite contractors, including contracts that have expired but are not yet closed out.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should establish procedures to require that property requirements be listed in individual contracts and that procurement offices verify subsequent property purchases against these lists.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: DOE disagreed with this recommendation.

Recommendation: The Secretary of Energy should establish procedures to require that monthly payment vouchers submitted by contractors itemize all property purchases, categorized by DOE funding and asset type, and that accounting and procurement offices record the information accordingly, regardless of funding.

Agency Affected: Department of Energy

Status: Closed - Implemented

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Energy should lead a cooperative effort with the Defense Contract Audit Agency (DCAA) Director to resolve the disagreement between the SPR project and DCAA regarding audit recommendation follow-ups.